Unrestricted Banking and Problem Banking

[minor-transgression]

'The rule is, jam to-morrow and jam yesterday - but never jam to-day.'
The Red Queen - Alice through the Looking Glass.

Have you notice a dearth of year-on-year figures of late? Where almost always
a month-on-month figure is multiplied by 12 in its place? That's because the
facade is proving difficult to keep in place. So, when the US Census Bureau
announced a 5.2% increase in real (inflation-adjusted) median household income,
over the 2015 year, the absence of jam today got noticed.

It may be, by a couple of lucky concidences, that what the Census Bureau said
is actually true, but that's not the real story. Have a look at the graph here:
http://politicalcalculations.blogspot.co.uk/2016/07/household-median-income-growth-stalling.html#.V9qh-SgrLAR
https://1.bp.blogspot.com/-DNWQIkH-h34/V5UANuO1WbI/AAAAAAAANyo/2AEDsV7_veM8tnAuSBr4Sme9pLltYR3WQCLcB/s1600/monthly-median-household-income-2000-01-thru-2016-06.png
Nominal Median Household Income (Current US$) rose from $54,000 in mid 2014 to $57,000
in 2016, or about 5.5% over two years before allowing for inflation.

Also here :
http://www.declineoftheempire.com/2016/09/deconstructing-median-income-bullshit.html

There are many things that could be said about this and other attempts at perception
management. Put simply, it's beginning to fail. If you gleefully thought that
US inflation was going to take off next year amid rate rises by the FED, well,
you just got punk'd by the US Census Bureau. I'll still hold to my forecast of
five percent inflation at some time in 2017, though, just later in the 2017 year.

All of which neatly ties up a loose end from a few weeks ago.

Some other stuff that caught my eye this last week.

"Chinese growth 'all but disappeared' amid economic restructuring, heavy
flooding, factory closures ahead of G20 
Complete absence¡ of y/y oil demand growth in 3Q16 China"

And this:
http://econimica.blogspot.co.uk/2016/06/global-peak-oil-demand-dead-ahead-but.html
"To begin, I'll focus on the present consumers of 70% of the worlds crude,
the OECD+China+Russia+Brazil. And if we check the annual change to their
combined 0-64yr/old population (blue line in the chart below),
0-64yr/old population growth has decelerated 90% since the '88 peak
and cumulatively turns to outright annual declines by 2019.
The annual declines accelerate indefinitely from there.
I also show total 0-64yr/old annual global growth (black columns)
and 0-64 growth among the RoW or Rest of the World (red line)."

I keep hoping I'm wrong, but the news just keeps coming.

[1714161276]

1714161276

[1714161276]

1714161276

[1714161276]

1714161276

[minor-transgression]

"I will do such things, What they are, yet I know not; but they shall be
The terrors of the Earth." - King Lear,  Scene IV

That's how the old regimes see the approach of the new ....

As we approach the abyss, their loss of control appears in many guises, from
the European Union's desire to punish the UK for Brexit, to the USA's
machinations in the Middle East. This week, a US General, a character straight
out of Dr Strangelove, pointed out that declaring war on Syria, and Russia,
was above his pay grade. That approximates where we are now,
and it doesn't get much more terrifying than that.

In other news, from elsewhere on the Titanic, soap and towels are being
stolen from the washrooms ....
https://www.thetruthseeker.co.uk/?p=139989
"Top Bank Fraud Expert: ALL of the Big Banks' Profits Come from FRAUD"
https://www.youtube.com/watch?v=Y_E35bbFP1E

Physician, heal thyself ....
https://www.intellihub.com/bis-warns-china-is-imploding/
"A key gauge of credit vulnerability is now three times over the danger threshold
and has continued to deteriorate, despite pledges by Chinese premier Li Keqiang to
wean the economy off debt-driven growth before it is too late."
"While the BIS is making noise about China's GDP, government bonds and debt, it is
failing to look at the U.S. and European Union, both of which are in far worse
condition than China."

For something really scary, look at Ireland's national debt, and then Ireland's GDP.
No problem? Now look at Ireland's N Debt/GNP .... hmmmmm

It's going to be a while before "The Terrors of the Earth" are revealed, and I doubt
I can add much more to this thread until they appear, maybe not even then.
So, time to start a new thread? ;-)

PS: The latest news out of China is on the use of entangled photons for radar.
That may have some implications for quantum computing, and for bitcoin.

[minor-transgression]

An Economist tells a joke:
Two economists are walking down a street. They walk past a pile of horse shit.
The first economist says "I'll give you $1,000,000 to put a horse ball between
two bits of orange peel and eat it." The second economist accepts and gets
a cheque for $1,000,000. They walk on and see some dog poo. The second economist
says "I'll give you $1,000,000 to put some dog poo between two bits of orange peel
and eat it." The first economist accepts and gets a cheque for $1,000,000.
The two economists laugh when they realize that their street cleaning has
increased GDP by $2,000,000.

Hillarious. But there's a deeper point here. What has value?

Does prostitution really raise GDP? Drug-dealing? Are these different in the
economy to other activities - hairdressing, for example? or pedicures?
And if these are legitimate in the economic arena, what does that say about
other forms of crime? for example, financial fraud?
Where does the economy draw the line between the IMF's GDP forecasts?
http://www.zerohedge.com/news/2015-06-21/greek-gdp-shocking-reality-vs-imf-forecasts-and-who-blame-greek-implosion
or earnings forecasts?
http://www.zerohedge.com/news/2016-10-26/earnings-magic-exposed
and a ponzi bubble in swamp land prices in Florida?
http://www.nytimes.com/1986/12/07/business/archives-of-business-a-rogues-gallery-charles-ponzi-a-pyramid-of-postage.html

Is value nothing more than the net present value of some future event?

Money, "It's all about the Benjamins", was at one time convertible into gold,
(https://www.youtube.com/watch?v=mnvrKdx5Mrs&feature=youtu.be - from corbett report episode292)
though there were more claims to gold than gold in the bank vault. Earlier
still, there was a 1:1 ratio at some time. And the origin of all this?
in ancient Mesopotamia, when barley was money, silver was the unit of account.
One shekel of silver was a claim on one gur of barley or a related measure.
http://www.ishtartv.com/en/viewarticle,35322.html
It was coded into the law. Serious economics in those days.

Here, today, there may be an equivalence between Value and
Schrodinger's Cat. It's that moment when Investor->Bagholder,
the moment when value may cease to exist. Until that moment
Investor and Bagholder can coexist in someone's consciousness.

But suppose "we" include financial fraud into our calculation of GDP.
And, I'd argue that the banker's promotion of the idea that they
are essential for our survival is the biggest fraud ever
perpetrated on the public, hence there is huge potential there.
What happens when that "value" drops out of existence? That moment
when fraud gets "found out"? Hold off on that thought for a moment.

More fraud Sir? What's not to like? It's GDP growth, that goal
of formation kowtowing. And just the sort of thing that seems sensible
when stock markets rise on bad news. It's the ultimate something
for nothing, it's something for less than nothing. Still ......

"Too much of a good thing can be wonderful." - Mae West

[The above is opinion, not advice, and the underlying mathematics
lacks rigour, but probably good enough for economics work]

[minor-transgression]

The Banking scandal rises again in Ireland, and in the EU Parliament.
For some, it's the gift that keeps on giving.

Banking whistleblowers get to tell their story:
http://www.golemxiv.co.uk/2016/11/whistleblowers-testify-eu-parliament/

And questions are asked :
"In 2007 you were governor of Banca d'Italia~Unicredti the biggest bank on your watch: Can you please confirm whether you were informed by the Central Bank of Ireland of the multi-billion Euro breaches at UniCredit Dublin?  If so, can you explain why the bank has never been sanctioned for those breaches of 2007."

reported here:
http://www.golemxiv.co.uk/2016/11/first-small-piece-shit-finally-sticks/

Mr Sugarman's book provides plenty of supporting detail on the trail
of destruction left by largely German but also Italian and Irish banking:
https://www.smashwords.com/books/view/685170

Some additional background can be gained by reading earlier posts in this
thread. You might also want to google "noonan+bomb+dublin" to expand on the
finer points of financial terrorism. Or a gentler form promoted by
Mr Geithner in his intervention regarding bailouts.

https://namawinelake.wordpress.com/2011/06/13/there%e2%80%99s-no-mystery-to-us-treasury-secretary-timothy-geithner%e2%80%99s-intervention-in-the-irish-bailout-wikileaks-has-already-revealed-the-reason/

You might conclude that if entities outside Ireland have the ability to
direct the policy of the Irish government by threats, they will have the
ability to decide everything else the country does.

Given current Irish reaction to Brexit, one could be forgiven for thinking
that the average Irish EU citizen has a shorter attention span than the
average goldfish. The usual response to such thoughts is that it's a free
country, but that seems to be no longer the case.

[minor-transgression]

2007. The thought crossed my mind, IANAL, that a load of the criminality such
as that involved in banking, has a ten-year sell-by date. So maybe next
year Mr Sugarman is free and clear to tell more and be more specific about
the things that got him fired, without it coming back to bite him.

Similar dates for Lehman Brothers and for WAMU, AIG, et al, cannot be too far
off in the future, so maybe a quick tour to refresh the old grey cells might
be timely. It's big, so, I'll condense it around Lehman Brothers.

Lehman priced real estate bets on the assumption of a five percent rise each and
every year. Not a problem if everyone else does the same, and nobody figures
out that the risks are way above what they should be. Similarly, the law is
written to ensure that when bankruptcy happens, creditors are made good and
equity at worst, gets wiped out. But when you have $600Bn+ of debt and $40Bn+ of
equity, margins of error are kinda slim, and repoin' ridiculous amounts (~$50Bn)
doesn't help, resulting in a leverage of just under 30. They might have got
away with it in different circumstances, but that's not the way things fell.

When bankruptcy happens, the governments gets first bite followed by the senior
debt holders. Stuff get sold off, usually at the worst possible time, and
in Lehman's case, some went for as little as eight cents on the dollar vs book.
When billions are involved, that's a huge haircut. The buyers, including
RBS and JP Morgan, didn't immediately show a huge profit, so there's another
story there. When the smoke and mirrors were cleared away, there were a
pile of claims totalling $300+Bn, and much less than $100Bn on paper to make
the creditors and equity good. [1]
 
Around that time questions were asked.
About where the ~$250Bn went? ... Noooo.
"Where did it all go wrong" and some time and more money later "Don't Know" in
about 900 pages. America has  a strange financial system. According to
Mr Corzine money gets "vaporized". Shades of Mr Krugman's Aliens. Maybe he
hopes "Mars Attacks" .... ZAP .... VaporiZed!!! happens all the time to debt
in the USA, it's only we aliens (foreigners) take any notice of such mundane matters. 
This is, of course sarcasm, as evidenced by what happens when "their"
money might be at risk.[2] [3]

Ten years on, is it "fixed"? - no.
Is it better or worse? - it is worse, the debt and the US banks are bigger.

That's enough for now.

[1] By way of example, see Deutsche Bank AG's claim 27141 against Lehman Brothers
for $2,494,729,944.42, one of several claims by Deutsche Bank. Almost all of these
outstanding monies in unsecured loans were owed to financial entities. The latest
payout on unsecured claims brings their total to something like one quarter of
face value. Exogenous money has a quaint habit of returning whence it came.
[2] WAMU Opinion 7 January 2011 p57 "The Plan Supporters argue that even
collection against JPMC [JPMorganChase] for claims the debtors have against
it is not assured." The Judge agreed "... bank deposits (especially in the
amount of $4 billion) may not be easily collectible without resulting in another
bank collapse."
[3] Leniency seems to be a one-way street.
https://thinkprogress.org/steve-mnuchin-onewest-e5fc28e0f285
"By 2015, OneWest had foreclosed on 36,000 homes, according to a nonprofit
called the California Reinvestment Coalition (CRC), which tracked the bank's
activities."

[minor-transgression]

Albert Einstein - 'We can not solve our problems with the same level of thinking that created them'

You are reading this because, at some time in the recent past, you saw
that Bitcoin might offer a different form of money. Since then, very little thought
seems to have been given to raising the level of thinking about money in general
and Bitcoin in particular. One topic should have seen serious scrutiny is Usury.
More precisely, the examination of consequences flowing from a legal ban on the
charging of interest on debt.

Think about GDP. Perhaps half of GDP is ethereal. Leave aside Arts and Entertainment
and over 40 percent of GDP is provided by the FIRE and related services sector in
the USA. This is the business of moving money from one pocket to another and
skimming a percentage. Bitcoin has already begun to shrink that world. If in
addition Usury was banned, I'll suggest that the FIRE sector would shrink to
one fifth of its present size. This end of Welfare for the already Wealthy would
deliver a serious hit to GDP.

What are the other consequences of banning Usury? Well, for one thing, the banks
would lose the power to create money. That bears some further explanation. Banks
would no longer be able to avoid the consequences of their actions. Creating
money creates inflation, and inflation dilutes the mistakes of the past while
making debt taxable. Without inflation and without the ability to lend money at
interest, banks are no longer banks in the sense that we know them. They can still
charge fees, but the balance of power has moved in favour of the common man,
of decentralisation, of smaller banks.

Without the ability to charge interest, it would be impossible to impose a
digital currency on a Nation such as that proposed for India. The hidden tax
imposed by interest would not be available to pay for increased cost of the
Infrastructure and Complexity needed to support the change. Which is why if
Usury ever becomes a mainstream issue you should expect a storm of protest from
the politicians in concert with the banks.

But aren't interest rates useful? Yes they are, as the expressed time preference
for money, interest rates direct investment from those best able to pay to the
investments offering the greatest reward, without much intervention. However,
if nothing else, 2008 highlighted the ability of the present system to get
things wrong. That system will not be fixed by repeating the same mistakes
on a larger scale.

There is another related issue, something more in common with Bitcoin than
the vagaries of a system with inflation. Suppose the money supply is fixed,
as it was for ancient economies based on precious metals. Suppose productivity
doubles, and the quantity of goods produced and consumed mimics that increase.
All else being equal, the price of goods should fall, but there would be no
change to GDP, despite everyone being relatively wealthier. The effect on
unemployment is indeterminate because the effects of international trade
are not predictable. Wages are "sticky", hence the benefits of improved
productivity will accrue to waged employees, instead of to the capitalist.

But I'm getting off topic, I'll post more on a new thread.

BTW, with November's US figures showing a slowing in US weekly earnings
growth YoY from 2.5% (October) to 2.2% (November), it looks like my
targets for 2017 US wage growth and US inflation are too high. But these
are preliminary figures, so I'll wait for December's figures in
mid-January before deciding that a trend has reversed.

[BobK71]

I personally don't believe Usury is the problem.  Usury is just the price of credit -- everything having a proper price is OK as long as the market is not manipulated by state power.

The problem is the state power that artificially cheapens credit over the long term, to benefit the elites who issue debt.  When too much debt is issued, whose value is then supported by all kinds of manipulative and deceptive actions like inflating other bubbles and starting military adventures, we have problems.

In a constant-money-supply world, prices would just go down as real wealth accumulates.  Economic growth would be fueled by credit, on which there would be no limit.  (The key here, again, is that credit be totally market driven -- any state intervention would create distortion and bubbles.)

The Great Fear of deflation that has been pounded into the minds of modern economists only applies to this world of centrally planned money.  Since too much money and credit have been created (from artificial, state-driven demand,) the economy has been distorted.  People have honed their skills and made investments based on the financially (artificially) inflated world that demands a lot of luxury for the rich, etc.  Once the bubbles are so big that market forces wake up and wipe out asset values, this demand disappears immediately and people lose jobs and savings.

Since the constant-money-supply world doesn't have the major man-made distortions to start with, asset value corrections would be minor in their impact and actually healthy for the economy.

[marshallbro]

thats y bitcoin has come to our rescue.when bitcoins will totally be used in the cryptocurency world in a full fledge there is a high possibility that the price of bitcoins will go high and there will be no banks at all.

[minor-transgression]

@BobK - My comment regarding Usury is on the Usury thread. Summary: I have a
problem with the moral implications of Usury.

As for hopes of high prices for bitcoin .....
There are reasons to suppose that bitcoin (and precious metals) cannot
increase much more in price. Higher prices imply excessive amounts of
energy consumption. In a way, it makes sense to lever precious metals, and
things like bitcoin via Fractional Reserve Banking into larger quantities
of circulating currencies. Fractional Reserve Banking limited itself to
a leverage of 10:1 or thereabouts, after suffering bouts of bankruptcies
over the centuries. The present Fiat Money system seems somewhat less inhibited.

[deisik]

@BobK - My comment regarding Usury is on the Usury thread. Summary: I have a
problem with the moral implications of Usury.

As for hopes of high prices for bitcoin .....
There are reasons to suppose that bitcoin (and precious metals) cannot
increase much more in price. Higher prices imply excessive amounts of
energy consumption. In a way, it makes sense to lever precious metals, and
things like bitcoin via Fractional Reserve Banking into larger quantities
of circulating currencies. Fractional Reserve Banking limited itself to
a leverage of 10:1 or thereabouts, after suffering bouts of bankruptcies
over the centuries. The present Fiat Money system seems somewhat less inhibited

The present monetary system makes fractional reserve banking inconsequential. As long as a bank doesn't get involved with subprime loans which could potentially make it insolvent, there is no need for reserves since the bank could always get liquidity from other banks on the interbank currency market or from a central bank directly if the banking system gets affected at large and things get serious up to a point where it gets massively imbalanced...

The fiat system is inherently stable, so it basically doesn't need FRB

[BobK71]

The present monetary system makes fractional reserve banking inconsequential. As long as a bank doesn't get involved with subprime loans which could potentially make it insolvent, there is no need for reserves since the bank could always get liquidity from other banks on the interbank currency market or from a central bank directly if the banking system gets affected at large and things get serious up to a point
where it gets massively imbalanced...

The fiat system is inherently stable, so it basically doesn't need FRB

There is no way to tell if a loan will become good or bad, so insolvency is always possible.  From a systemic policy point of view, the key is to avoid 'moral hazard,' where it benefits bank execs to destabilize the bank.  When a bank becomes insolvent, it doesn't matter what you do, the public always suffer (ultimately, to benefit the bankers.)

But 'moral hazard' is baked into the cake of the present fiat monetary system, if you look at the incentives faced by central bankers, bankers and politicians.  (Where 'moral hazard' also means the incentives for a politician to destabilize public debt, or for a central banker to destabilize the monetary system.)

When the elites have the power to create money, they will always use it to benefit themselves at the expense of everyone else.

[BobK71]

@BobK - My comment regarding Usury is on the Usury thread. Summary: I have a
problem with the moral implications of Usury.

As for hopes of high prices for bitcoin .....
There are reasons to suppose that bitcoin (and precious metals) cannot
increase much more in price. Higher prices imply excessive amounts of
energy consumption. In a way, it makes sense to lever precious metals, and
things like bitcoin via Fractional Reserve Banking into larger quantities
of circulating currencies. Fractional Reserve Banking limited itself to
a leverage of 10:1 or thereabouts, after suffering bouts of bankruptcies
over the centuries. The present Fiat Money system seems somewhat less inhibited.

I will read your thread.

But I'm not sure what you mean by 'higher prices imply excessive amounts of energy consumption.'  Can you elaborate?

"...it makes sense to lever precious metals, and things like bitcoin via Fractional Reserve Banking" -- I think the key is, what 'makes sense' or not should be for the markets to decide.  Markets would probably leverage up when left alone.  After all, what can possibly drive growth if everyone holds gold bars only under the mattress?  But all prices of risk should be based on supply and demand.  As long as there is no state power to distort the markets directly or indirectly, there should be no problem (or at least not nearly as much problem as we have today.)

[minor-transgression]

Still no updated figures from US .gov to allow an update to my projected
2017 economy. They are still changing their figures back to 2013, so final
figures for 2017 may not appear until after 2020. If your income depends on
updates to US CPI for increments, suck it up, buttercup.

The reason for this update is a couple of news items on productivity:

"Yellen blamed the recession and lack of productivity for poor earnings growth. Greenspan blamed the aging of baby boomers. Given real earnings have been nearly flat since 1979 while real output is up 94.9%, those theories are obviously faulty. Doesn't the Fed bother to test their theories against actual data? You have the answer."
"Output per hour has been growing at approximately 1/2% annually in the US and other developed countries over the past five years, compared with an earlier growth rate closer to 2%. That is a huge difference, which is reflected proportionately in the gross domestic product and in people's standard of living."
http://www.zerohedge.com/news/2017-04-05/productivity-myths-shattered-productivity-rising-or-falling-why

You might not immediately see the connection to this item:
http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/03/27/These_2_Charts_Show_Just_How_Close_We_Are_to_Healthcare_Collapse1.png
"The United States is in the upper right, which shows that our per-person healthcare spending is significantly higher than that of the other OECD countries. Switzerland is a distant second place. Our extra spending doesn't help us live longer. We actually die a little earlier than our peers in Japan and most of Europe. You can quibble over details in this data, but the broad facts are inescapable. We spend too much on healthcare relative to the health it buys us. As long as that is the case, no reform plan will work."

Fix healthacre, and pensions will implode .... oh wait ...

Add to that the US "Education" System, and if you are an American, you're screwed.
But you knew that already. Maybe lying down in a darkened room will help you
feel better. It's much cheaper than Valium.

Meditate on the productivity graph. Note that each data point is an average of
the past five years. Note also that the last year plotted is 2015.

And another thing, when you are invited to "share" your anonymity with a bitcoin exchange KYC ....
http://www.counterpunch.org/2017/04/04/the-bankers-free-lunch-continues/
"The overwhelming evidence provided by the above-mentioned (and other) economists is that once a particular speculative round runs its course, this ´investment¡ is converted into 'gains' directed, almost entirely, at already existing assets (primarily real estate), and so does little or nothing for the productive economy."
"A couple of weeks ago, for instance, the Guardian published a long investigative piece, titled the 'Global Laundromat', detailing how 17 UK banks laundered £20/$25bn, mainly for Russian oligarchs with criminal links. The same Guardian article estimates that around £100/$125bn a year is laundered by UK banks for shadow and criminal entities."
"This though is the tip of the proverbial iceberg."
"According to the right-wing tabloid, the Daily Mail (always slavishly beholden to the Conservatives), Javid was a senior executive at DB in 2004 when it funnelled bonuses through the Cayman Islands to enrich 300 senior staff in London."

[megynacuna]

thats y bitcoin has come to our rescue.when bitcoins will totally be used in the cryptocurency world in a full fledge there is a high possibility that the price of bitcoins will go high and there will be no banks at all.

Precisely Bitcoin had brought about this financial freedom that the banks restricted by globalizing transactions from the comfort of your computer or phone. Bitcoins prices are for sure bent on consistent ascendency and I know that's what might lead to the obsolescence of banks.

[centralbanksequalsbombs]

Still no updated figures from US .gov to allow an update to my projected
2017 economy. They are still changing their figures back to 2013, so final
figures for 2017 may not appear until after 2020. If your income depends on
updates to US CPI for increments, suck it up, buttercup.

The reason for this update is a couple of news items on productivity:

"Yellen blamed the recession and lack of productivity for poor earnings growth. Greenspan blamed the aging of baby boomers. Given real earnings have been nearly flat since 1979 while real output is up 94.9%, those theories are obviously faulty. Doesn't the Fed bother to test their theories against actual data? You have the answer."
"Output per hour has been growing at approximately 1/2% annually in the US and other developed countries over the past five years, compared with an earlier growth rate closer to 2%. That is a huge difference, which is reflected proportionately in the gross domestic product and in people's standard of living."
http://www.zerohedge.com/news/2017-04-05/productivity-myths-shattered-productivity-rising-or-falling-why

You might not immediately see the connection to this item:
http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/03/27/These_2_Charts_Show_Just_How_Close_We_Are_to_Healthcare_Collapse1.png
"The United States is in the upper right, which shows that our per-person healthcare spending is significantly higher than that of the other OECD countries. Switzerland is a distant second place. Our extra spending doesn't help us live longer. We actually die a little earlier than our peers in Japan and most of Europe. You can quibble over details in this data, but the broad facts are inescapable. We spend too much on healthcare relative to the health it buys us. As long as that is the case, no reform plan will work."

Fix healthacre, and pensions will implode .... oh wait ...

Add to that the US "Education" System, and if you are an American, you're screwed.
But you knew that already. Maybe lying down in a darkened room will help you
feel better. It's much cheaper than Valium.

Meditate on the productivity graph. Note that each data point is an average of
the past five years. Note also that the last year plotted is 2015.

And another thing, when you are invited to "share" your anonymity with a bitcoin exchange KYC ....
http://www.counterpunch.org/2017/04/04/the-bankers-free-lunch-continues/
"The overwhelming evidence provided by the above-mentioned (and other) economists is that once a particular speculative round runs its course, this ´investment¡ is converted into 'gains' directed, almost entirely, at already existing assets (primarily real estate), and so does little or nothing for the productive economy."
"A couple of weeks ago, for instance, the Guardian published a long investigative piece, titled the 'Global Laundromat', detailing how 17 UK banks laundered £20/$25bn, mainly for Russian oligarchs with criminal links. The same Guardian article estimates that around £100/$125bn a year is laundered by UK banks for shadow and criminal entities."
"This though is the tip of the proverbial iceberg."
"According to the right-wing tabloid, the Daily Mail (always slavishly beholden to the Conservatives), Javid was a senior executive at DB in 2004 when it funnelled bonuses through the Cayman Islands to enrich 300 senior staff in London."

minor-transgression: I look forward to seeing more of your posts.

Yes more and more $ into "healthcare" and "education" when the results are obviously subpar in both systems (sometimes, results are countradictory to the spend). Things never go worse when you spend $ getting healthcare at a hospital, right? Wrong. Miseducation is another subject.

There are no checks and balances in fiat credit destruction or creation when the financial system has been controlled by a consortium of monopolistic central banks around the world. This is not a free market. This is much worse than a regime run by a hitler-like tyrant. Various precious metals eons ago used to be a check & balance on this, but have had cracks in its function, some blame manipulation.   

Bitcoin, however has emerged and is still in early stages of emerging as the true mirror to this controlled financial system and out of control liquidity from the global central banks. The mirror currently indicates the extent of credit/fiat creation indicative of bitcoin's continual explosion in price. It has outpaced stocks, gold, real estate, bonds. This is why Bitcoin has become king of all asset classes for store of value.

I go into this on post titled : "Hacks & puppets & forks - how to destroy bitcoin" https://bitcointalk.org/index.php?topic=1834310.0
 

[minor-transgression]

I've been waiting for the US statisticians to post some figures. Maybe they've finally
figured out there might be a problem, hence the delay. I'll post an update later,
but since the SRSroccoReport got at least halfway there months ago, I'll explain
at least some of the issues.

https://srsroccoreport.com/warning-the-coming-collapse-of-u-s-net-worth-will-wipe-out-millions-of-americans/
"The rapidly falling EROI - Energy Returned On Invested is gutting the entire U.S. oil industry and economy.  Instead of the United States enjoying real fundamental growth based on increased energy consumption, we have turned to inflating electronic digits as an indication of our wealth.
As I explained in the beginning of the article, U.S. energy consumption has been flat for the past six years, while U.S. GDP has increased nearly 25%, as our supposed net worth has jumped 54%.  Again, this goes against any sound fundamental economic theory.  We have totally removed ourselves from reality."

US energy consumption, as in most places, is tightly correlated with GDP. While there are
reasons to be suspicious about GDP figures and about the correlation, it's good enough
to show divergence when a problem appears. That divergence began in 2010. That much is
fact, and as stated by the SRSroccoReport.

Add electricity use, and add vehicle miles driven to the data contradicting the US Government.

Here's where the statisticians have a problem. Let's call Price Inflation in the US Economy PI.
CPI is a subset of PI, ie it's not the big picture. CPI consistently understates PI by ~1.5%pa,
and ~12% since 2010. The difference cannot be ignored for much longer. I doubt things can
be fixed outside a complete revision of data since 2010. By these measures Real US GDP
hasn't grown much since 2005. Yes, 2005, depending on how you measure it. 

And then they have to find someone to blame.
There's more, much more, but it's still a work-in-progress.

[minor-transgression]

I'm still waiting for the US statisticians to produce the 2016 figures ... Ho Hum ....

http://www.zerohedge.com/news/2017-05-27/albert-edwards-what-earth-going-us-wages
"As headline CPI inflation surged this past six months, rapid real wage growth turned into real wage stagnation (see chart above). I believed that a tight labour market would prompt an aggressive reaction from "the workers" to maintain the previous 1½-2% rate of real wage inflation they had enjoyed and got used to through 2015 and 1H 2016. Hence I expected nominal wage inflation would roar upwards in 1Q this year. How wrong I was!"
"And before readers respond with "there is always more QE", the problem is that for both the ECB and BOJ, the answer is increasingly, "there isn't" as both central banks are just months away from running out of eligible bonds to buy, beyond which point the entire bond market may simply lock up, or the central banks will have to even more actively start buying equities, with both outcomes effectively a nationalization of capital markets. And the last time we checked with the USSR, that strategy did not work out too well..."

The concern here is that Albert Edwards may be right, and that the US data is a mirage.

It wasn't that long ago that "eyeballs" and "clicks" were valuable. Today, what price
are "likes" and for how long can a unicorn lose money?  Will Uber make a profit before
the Central Bankers have bought everything?
 

[Hydrogen]

Rather than "unrestricted banking" or "problem banking".

"Centralized banking" could be the key term we're looking for.

Centralized power structures/centralized banking can be indiscernible from "monopolies".

In that "free market banking" or "decentralized banking" could be goals worthy of aspiration.

[minor-transgression]

Central Bankers and their fellow travellers like to talk about economic stability.
By this they actually mean exponential growth in the money supply at a rate
well in excess of the growth in wealth or GDP. That's why I use
Unrestricted Banking to describe the present financial system. There are some
complicated consequences that follow from this, but if we can't agree that
"Unrestricted Banking" actually describes the present system, we won't agree
on much else.

If we can't agree on what the figures ought to mean, how can we decide whether
they might be wrong? 

[BobK71]

Central Bankers and their fellow travellers like to talk about economic stability.
By this they actually mean exponential growth in the money supply at a rate
well in excess of the growth in wealth or GDP. That's why I use
Unrestricted Banking to describe the present financial system.

I should mention that the modern system *must* have this money growth in excess of GDP/wealth growth to survive.

That is because savers *must* be artificially biased towards taking risks with their money, or the whole economy and system will implode by deflation (under the current conditions at any given time during the modern era.)  They must be 'persuaded' to do so by losing automatically to inflation, if they choose to stay safe.

From this angle, the coercive, deceptive, and indeed criminal nature of the system becomes pretty easy to see.